BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1229|
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THIRD READING
Bill No: AB 1229
Author: Atkins (D), et al.
Amended: As introduced
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 6-5, 7/2/13
AYES: DeSaulnier, Beall, Hueso, Lara, Liu, Pavley
NOES: Gaines, Cannella, Galgiani, Roth, Wyland
ASSEMBLY FLOOR : 41-31, 5/30/13 - See last page for vote
SUBJECT : Local inclusionary: zoning regulations
SOURCE : California Rural Legal Assistance Foundation
Non-Profit Housing Association of Northern
California
San Diego Housing Federation
Western Center on Law and Poverty
DIGEST : This bill overturns the Palmer decision and expressly
authorizes a county or city to establish inclusionary housing
requirements as a condition of development.
ANALYSIS : Article XI, Section 7 of the California
Constitution grants counties and cities the power "to make and
enforce within its limits all local, police, sanitary, and other
ordinances and regulations not in conflict with general laws."
This is generally referred to as the police power of local
governments. The Planning and Zoning law within state statute
is a general law that sets forth minimum standards for counties
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and cities to follow in land use regulation, but the law also
establishes the Legislature's clear intent to "provide only a
minimum of limitation in order that counties and cities may
exercise the maximum degree of control over local zoning
matters."
Using this police power, many counties and cities have adopted
ordinances, commonly called "inclusionary zoning ordinances,"
that require developers to ensure that a certain percentage of
housing units in a new development be affordable to lower income
households. According to the California Rural Housing
Coalition's database, 140 jurisdictions in California currently
have mandatory inclusionary zoning ordinances. These ordinances
vary widely in the percentage of affordable units required, in
the depth of affordability required, and in the options through
which a developer may choose to comply. Most if not all such
ordinances apply to both rental and ownership housing.
In 2009, in the case of Palmer v. City of Los Angeles, the
Second District California Court of Appeal opined that the
city's affordable housing requirements associated with a
particular specific plan (akin to an inclusionary zoning
ordinance), as it applied to rental housing, conflicted with and
was preempted by a state statute known as the Costa-Hawkins
Rental Housing Act. The Costa-Hawkins Act limits the
permissible scope of local rent control ordinances. Among its
various provisions is the right for a rental housing owner
generally to set the initial rent level at the commencement of a
tenancy, even if the local rent control ordinance would
otherwise limit rent levels across tenancies. This provision is
known as vacancy decontrol because the rent level is temporarily
decontrolled after a voluntary vacancy. The act also gives
rental housing owners the right to set the initial and all
subsequent rental rates for a unit built after February 1, 1995.
The court opined that "forcing Palmer to provide affordable
housing units at regulated rents in order to obtain project
approval is clearly hostile to the right afforded under the
Costa-Hawkins Act to establish the initial rental rate for a
dwelling or unit."
This bill expressly authorizes a county or city under the
Planning and Zoning Law to establish as a condition of
development inclusionary housing requirements, which may require
the provision of affordable residential units for low-, very
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low-, or extremely low-income owners or tenants. The bill
further declares the intent of the Legislature to supersede any
holding or dicta in Palmer v. City of Los Angeles that conflicts
with this authority.
Comments
The inclusionary zoning debate . The purposes of inclusionary
zoning ordinances are twofold. First, inclusionary zoning
ordinances are intended to increase the production of affordable
housing by leveraging additional resources and opportunities.
While developers often do not build the mandated affordable
units themselves or pay their full cost, inclusionary zoning
ordinances generally place the burden on the developer to ensure
construction of the affordable units. To fulfill this
obligation, developers often donate land or make a financial
contribution, or both, towards development costs. Many
ordinances also allow a developer to fulfill his or her
obligation by paying an in-lieu fee, which the city or county
uses to help finance its own development.
The second purpose of inclusionary zoning ordinances is to
achieve "inclusion" in newly-developing communities. Over the
past few decades, development in California has generally
resulted in single-product neighborhoods, often single-family
home subdivisions. In many cases, the prices of these new homes
are affordable only to the upper end of the market. Because
inclusionary zoning results in some homes being sold at
below-market rates or in a greater mix of housing products
(duplexes, townhomes, condos, apartments) that come at a greater
variety of prices, it increases economic diversity within
neighborhoods and meets a greater range of the community's
housing needs.
In summing up the inclusionary zoning experience in California
in its 2007 report, the California Coalition for Rural Housing
states, "The single most important conclusion is that
inclusionary programs are putting roofs over the heads of tens
of thousands of Californians. These homes, in turn, are building
mixed-income neighborhoods where houses considered 'affordable'
are often indistinguishable from those at market-rate."
While market-rate housing developers generally do not argue with
the "inclusionary" aspect of inclusionary zoning, they often do
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take issue with having to contribute their resources for a
societal benefit. They believe that if a jurisdiction wants to
promote greater affordable housing, it should spend public
resources for this purpose rather than require a private entity
to do so. Developers also point out that theirs is one of the
few industries that is asked to provide its product at
below-market prices to some of those who cannot afford the full
price.
Legislative history on the Costa-Hawkins Act . The Legislature
enacted the Costa-Hawkins Rental Housing Act in 1995 with the
passage of AB 1164 (Hawkins), Chapter 331. The various analyses
for this bill and its predecessor, SB 1257 (Costa), exclusively
discuss local rent control ordinances and do not once mention
inclusionary zoning ordinances, which did exist at that time.
The Assembly concurrence analysis of AB 1164, which is very
similar to the other analyses, states that the bill
"establish[es] a comprehensive scheme to regulate local
residential rent control." The analysis includes a table of
jurisdictions that would be affected by the bill, and the table
exclusively includes cities with rent control ordinances and
does not include any cities that had inclusionary zoning
ordinances affecting rental housing. The analysis also states,
"Proponents view this bill as a moderate approach to overturn
extreme vacancy control ordinances which unduly and unfairly
interfere into the free market." The analysis further describes
strict rent control ordinances as those that impose vacancy
control and states, "Proponents contend that a statewide new
construction exemption is necessary to encourage construction of
much needed housing units, which is discouraged by strict local
rent controls." This legislative history provides no indication
that the Legislature intended to affect local inclusionary
zoning ordinances with the passage of AB 1164.
Prior Legislation
SB 184 (Leno, 2012) was identical to this bill. SB 184 failed
passage on the Senate Floor.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 8/12/13)
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California Rural Legal Assistance Foundation (co-source)
Non-Profit Housing Association of Northern California
(co-source)
San Diego Housing Federation (co-source)
Western Center on Law and Poverty (co-source)
American Planning Association, California Chapter
BRIDGE Housing
Cabrillo Economic Development Corporation
California Coalition for Rural Housing
California Housing Partnership Corporation
California State Association of Counties
CHISPA Housing (Salinas)
Cities Association of Santa Clara County
Cities of: Azusa, Berkeley, Brawley, Burbank, Calistoga,
Capitola, Ceres, Chico,
Chowchilla, City and County of San Francisco, Cloverdale, Colma,
Coronado,
Danville, Davis, Del Mar, El Centro, El Cerrito, Emeryville,
Fort Bragg,
Hillsborough, King City, Lathrop, Livingston, Lodi, Los Altos,
Los Angeles, Mill
Valley, Monterey, Napa, Novato, Oakland, Pasadena, Riverside,
Salinas, San
Diego, San Jose, San Mateo, San Rafael, Santa Monica, South San
Francisco, Tulare, Turlock, Union City, Vista, Wasco
City/County Association of Governments of San Mateo County
Community Corporation of Santa Monica
Corporation for Supportive Housing
Council of Community Housing Organizations
County of San Mateo Board of Supervisors
EAH Housing (San Rafael)
East Bay Housing Organizations
Eden Housing
Fair Housing of Marin
First Place for Youth
Greenbelt Alliance
Habitat for Humanity
Housing California
Housing Leadership Council of San Mateo County
Law Foundation of Silicon Valley
LeadingAge California
League of California Cities
League of California Cities, Los Angeles County Division
League of Women Voters of California
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League of Women Voters of Marin County
Marin Partnership to End Homelessness
Marin Workforce Housing Trust
Mercy Housing
Metropolitan Transportation Commission
MidPen Housing
Move LA
Sacramento Housing Alliance
Self-Help Enterprises
Silicon Valley Leadership Group
Southern California Association of NonProfit Housing
State Building and Construction Trades Council
OPPOSITION : (Verified 8/12/13)
Apartment Association California Southern Cities
Apartment Association of Greater Los Angeles
Apartment Association of Orange County
California Association of Realtors
California Building Industry Association
California Business Properties Association
East Bay Rental Housing Association
GH Palmer Associates
Nor Cal Rental Property Association
Orange County Association of Realtors
Pardee Homes
San Diego County Apartment Association
San Francisco Association of Realtors
Santa Barbara Rental Property Association
ARGUMENTS IN SUPPORT : According to the sponsors, local
inclusionary housing programs have proven to be one of the most
effective tools for producing new homes affordable to working
families and creating strong, diverse neighborhoods with a range
of housing choices. Inclusionary ordinances have provided
quality affordable housing to over 80,000 Californians,
including the production of an estimated 30,000 units in the
last decade alone. While many of these local programs have been
in place for decades, the recent Palmer decision has created
uncertainty and confusion for local governments and housing
advocates regarding the future viability of this important local
land use tool. According to the author, this bill resolves a
conflict between local inclusionary zoning ordinances and the
state's Costa-Hawkins Rental Housing Act, thereby restoring the
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ability of local governments to use one of the most effective
tools at their disposal to promote the production of both
ownership and rental homes that are affordable to California's
lower income working families.
ARGUMENTS IN OPPOSITION : Opponents argue that inclusionary
zoning is akin to rent control and that this bill therefore
allows local governments to enact and enforce rent control on
newly constructed rental housing units by pre-empting the
Costa-Hawkins Act. They believe that the Costa-Hawkins
protections for new construction are appropriate and should be
maintained and that the bill will seriously hurt the
construction industry. They further believe that the
Legislature intended to overrule inclusionary zoning ordinances
with the Costa-Hawkins Act because otherwise it would have
created another exemption similar to the one stating that the
act does not apply when the developer has "agreed by contract
with a public entity in consideration for a direct financial
contribution or any other forms of assistance specified in
[density bonus law]."
ASSEMBLY FLOOR : 41-31, 5/30/13
AYES: Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,
Bonta, Bradford, Brown, Ian Calderon, Campos, Chau, Chesbro,
Cooley, Dickinson, Eggman, Fong, Garcia, Gomez, Gonzalez,
Gordon, Gray, Hall, Jones-Sawyer, Levine, Lowenthal, Medina,
Mitchell, Mullin, Muratsuchi, Nazarian, Pan, Rendon, Skinner,
Stone, Ting, Weber, Wieckowski, Williams, Yamada, John A.
Pérez
NOES: Allen, Bigelow, Chávez, Conway, Dahle, Daly, Donnelly,
Frazier, Beth Gaines, Gatto, Gorell, Grove, Hagman, Harkey,
Jones, Linder, Logue, Maienschein, Mansoor, Melendez, Morrell,
Nestande, Olsen, Patterson, Perea, V. Manuel Pérez,
Quirk-Silva, Salas, Wagner, Waldron, Wilk
NO VOTE RECORDED: Achadjian, Bonilla, Buchanan, Fox, Roger
Hernández, Holden, Quirk, Vacancy
JA:nl 8/12/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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